Indian industrialist Ratan Tata has transformed the fortunes of Jaguar Land Rover since taking over the firm in 2008. He speaks to Graeme Brown about the future of the Midlands’ most important company.
It has become the UK’s go-to success story – a historic car-maker that has gone from losing hundreds of millions of pounds to a record £1.5 billion profit – during a recession.
But Ratan Tata, the chairman of Jaguar Land Rover’s parent company Tata Motors is warning against getting carried away with the financial success.
Mr Tata accepted there had been a marked turnaround at the company his firm took over in 2008, which lost almost £350 million the next year, but said despite gargantuan profits of late the cyclical nature of the automotive sector meant the company dare not rest on its laurels.
In an exclusive interview with the Birmingham Post, Mr Tata also revealed plans for a host of new models were progressing strongly, and cast doubt over whether electric cars were close to establishing themselves on the mass market.
The company is currently in the throes of setting up a production base in China, and has been linked with plants elsewhere, but Mr Tata said the West Midlands remained at the heart of plans, and there were more likely possibilities to increase capacity, such as additional shifts.
Mr Tata, who is set to retire in December after more than 30 years as Tata Group chairman, said despite the latest results showing demand from China had pushed revenue past £13.5 billion, and pre-tax profit to £1.5 billion, the company had struggled before, and there was no certainty of success.
He said: “The company went down initially because of the downturn. All of us were thinking ‘why did we buy this white elephant? What a stupid thing to do!’
“I am very proud of what the people of Jaguar and Land Rover have been able to do but there is a long way to go. It is a cyclic thing.
“We have moved on from where we were but the competition isn’t going to sit quietly – it is a dog-eat-dog world.
“We have a long way to go but I am hopeful that as a company we will bring these brands back to their previous glory.”
Jaguar Land Rover appears in rude health four years on from the £1.15 billion takeover by Mumbai-based Tata at a time when its very survival was under threat.
Billions of pounds have been invested in research and development, with a view to a new model family, and the knock-on effect has been felt by about 20,000 direct employees in the UK and thousands more in the automotive supply chain.
The Range Rover Evoque and the Jaguar XF have been vital to the revival, and while remaining tight-lipped about future models, Mr Tata said there would be plenty more to come – including the F-Type, the convertible sports car.
The company’s successes – which saw retail sales rise 27 per cent last year to 305,859 units – comes on the back of soaring demand in China, which is on course to become the group’s strongest market.
While JLR has agreed a joint venture with China’s Chery Automobile to establish a production base in the Far East, Mr Tata said Britishness remained at the heart of the company and there were no plans to change that.
He said: “The two brands have their home in the UK. Their heritage is here and they exude Britishness.
“Our intention is to retain that and to move back to the glory that the two brands once had and to expand the footprint globally in international markets, also in the UK and western Europe and the US, which is a big and important market.
“Now markets like China have emerged, which, amazingly, recognise the heritage and the brands. We are looking at increasing our footprint in China substantially by way of a joint venture.
“And India has emerged as an interesting potential market. In fact, what we have for our plans in the UK, when we took the company there were lots of rumours about closing down one plant and operating two.
“Now we are operating three plants full blast, we have added 1,000 people and we are looking at creating the fourth plant in Staffordshire, an advanced engine plant.
“The UK remains the engineering, creative and major manufacturing base for Jaguar and Land Rover.”
Reports have linked JLR with establishing a new base in Brazil to assemble Freelander 4x4s, as a first step towards full local production of cars in South America’s largest economy.
However, Mr Tata said the Chinese plant was the only one currently on the table.
The 74-year-old, who will be succeeded as Tata Group chairman by Cyrus Mistry at the start of next year, said there was no urgent need to build new plants from a capacity perspective, as there are options to alter shift patterns to allow for increased demand.
Another alternative would be to outsource sub-assembly, rather than just components, which would also increase capacity.
It was reported on Birminghampost.net this week that union leaders have warned workers the Jaguar Castle Bromwich factory is at risk if they do not agree to new working practices.
The warning came against the backdrop of a potential £200 million investment in the plant and ahead of a ballot on a range of new practices, including compulsory Saturday working. In May initial plans were rejected by 1,153 against to 756 votes in favour.
Mr Tata, who was knighted as a Knight Commander of the Order of the British Empire in 2009, did not speak directly about the ballot, but said the Castle Bromwich plant remained a part of future plans.
He said: “Castle Bromwich always seemed to be a question of controversy over rumours it would close.
“Those fears have proved to be unwarranted because Castle Bromwich is working full blast. It will always be our centre of excellence for our cars and an advanced manufacturing facility.
“The XJ and XK are produced there and both of them are selling. Today we have no negative plans for Castle Bromwich.”
Meanwhile, work continues on the new £355 million car engine plant being built near Wolverhampton, which will become JLR’s fourth plant and create up to 750 jobs directly and thousands more in the supply chain. Mr Tata, the grandson of Tata Group founder Jamsedji Tata, said there were no plans for a fifth.
The Cornell University and Harvard Business School-educated industrialist said while there was an “imbalance” in parts of the UK engineering sector, the skills remain strong in the UK.
He said: “There are amazingly high skills, but unfortunately some industries need help. By help I mean financial help and the kind of help that comes from incentives or stimulus packages that the Government might do.
“It is the strength of the UK but it is latent. It is latent because the user industries have all but disappeared.”
Meanwhile, the Post reported in May that Tata seemed set to pull the plug on plans to introduce an electric vehicle in the UK in a move that could put the electric car dream on hold for the foreseeable future.
Just 940 electric cars were sold in Britain last year, a figure that fell short of what had been hoped for and expected by the Government, and Mr Tata said he did not see a bright short-to-medium-term future for electric and hybrid cars.
He said: “I don’t think there has been a big step back but we have to realise that electricity is not going to be the new power for all vehicles tomorrow.
“Batteries are expensive and if there are going to be more electric cars there is going to have to be tremendous intervention from governments to make it happen.
“We have our foot in the electric business and hybrids but I don’t think we will see many marketable vehicles in the future. The internal combustion engine is going to be around for a long time,” he added.
“There might be alternative fuels and biofuels but I don’t think electric cars are going to be a fifth of the cars certainly for the next few years.”